Mart seen to consolidate within a narrow range

The equities market will continue to consolidate within a narrow range this week as news-hungry investors opt to be more selective than speculative, analysts said.

"The market is expected to continue its consolidation in the absence of any fresh developments. Bargain hunters are seen to take the opportunity of market dips to accumulate; however, equal pressure has been noted from sellers accounting for the market’s rather lackluster performance (last week)," BPI Securities vice president Spencer Yap said.

Despite the lethargic trading volume over the past two weeks, the main index managed to lift itself up, gaining 21.77 points or 1.54 percent week-on-week to end at 1,432.19 points last Friday.

Yap said for the most part, demand has remained strong with buyers sticking to current favorites. "Because of this strong demand, market dips have been pretty shallow. Foreign funds were also generally on the buy side," he added.

Among the selected issues which posted gains during the week were the newsmakers. Metro Pacific gained on news that it was able to sell a property in its Fort Bonifacio development, offsetting the impact of its reported P23-billion loss in 2001. Megaworld prices rose on its participation in the winning consortium for the Bonifacio sale, while San Miguel strengthened with the completion of the Kirin buy-in, as investors digested the impact of the Japanese brewer’s P28-billion cash infusion.

Other gainers included Digitel, which plans to spend P13.5 billion to roll out its cellular phone system later this year; and the restructuring Ayala Corp. and Ayala Land. RFM Corp. and subsidiary Swift Foods Inc. also rose on continued speculations they will be San Miguel’s next acquisition targets.

"The market might start the week on a tentative note as players wait for improvements in value turnover. This is among the variables considered while market indices consolidate above the 1,400 base, a report by 2TradeAsia.com, the website portal of F.Yap Securities, noted.

It pointed out that while inherent risks have already abated, others are also looking for new incentives that can prod them to shift part of excess funds into equities trading, including prospects that the US Federal Reserve might be inclined to keep benchmark rates unchanged during their next policy meeting.

"Regardless, we believe medium-returns are still much better in equities trading, with indicative yields on fixed income instruments hovering at only five percent to 6.5 percent (gross basis). As previously mentioned, an ascent would also be triggered in case market players see potential windows for creditors to approve debt restructuring plans for some of the local bourse’s heavyweight," the report added.

For his part, Roberto Cano, also of BPI Securities, noted that while the macroeconomic outlook for the country has improved, investors seem to be reluctant to push prices higher.

"They are most likely awaiting for more news that would support further an economic recovery scenario. We also think they would like to see first quarter results if the profitability performance of these corporations are within expectations of a growing economy. The consolidation in the market provides an opening for investors to enter the market," he stressed.